Malaysian economy shrinks 1.2% in Q3
Posted: 21 November 2009 0221 hrs

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KUALA LUMPUR : Malaysia economy shrunk by 1.2 percent in the third quarter, the country's statistics department said Friday.

The contraction is smaller than the country's second quarter shrink of 3.9 percent which caused the economy to fall into a technical recession following a first quarter contraction of 6.2 percent, the first contraction in nearly eight years.

"The smaller negative growth was attributed to the further expansion of the services and construction sectors," the department said in a statement.

Prime Minister Najib Razak said last month Malaysia's economy was expected to shrink by 3.0 percent this year compared to the 4.0-5.0 percent contraction tipped earlier, saying the country could post modest growth in 2010.

The consumer price inflation from January to October this year increased by 0.6 percent compared to the same period last year while the inflation index for October registered a decrease of 1.6 percent when compared to the same month last year, the department said.

It said the decline in the monthly index was due to the reduction in the high price of petrol and diesel that saw a major hike beginning in June last year.

In October, the finance ministry said in its annual report that the economy was expected to grow between 2.0-3.0 percent in 2010 thanks to improving domestic and external demand.

Average consumer price inflation is predicted at 1.0 percent this year, slower than the forecast of 1.5-2.0 percent made by the central bank in March.

Exports are expected to shrink 19.2 percent in 2009, but could rebound to a record 5.1 percent growth in 2010, it said.

Malaysia has announced two stimulus packages, the most recent in March billed as containing some 60 billion ringgit (17.69 billion dollars) in measures to pump-prime the economy.

- AFP /ls